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January 13, 2015

Credit Cards for Small Business Owners

According to a 2012 National Federation of Independent Business (NFIB) study, 79 percent of small business owners have used credit cards to start or grow their business. This means that three out of four small businesses are using credit cards on a regular basis. Not only are credit cards being used to help finance small business, it is also having great affects on the economy as a whole.

Credit Card Offers

If you are a small business owner, you have most likely received numerous offers for small business credit cards. You may be hesitant when it comes to accepting these offers out of fear your businesses finances will surge out of control with such a financing option. However, business credit cards are an excellent way to access financing for short-term needs, helping to increase your business’ buying power and allowing your credit rating to grow. This doesn’t put the fear of out of control credit cards to rest. As long as you manage your accounts appropriately, you will see more pros than cons with this short-term financing option.

Pros to Business Credit Cards

There are many reasons for you to consider a business credit card to meet your business’ short-term financing needs.

  • Regardless of if your business has an established credit history or not, business credit cards are easy to qualify for.
  • Business credit cards offer consistency. You can quickly access funds for business purchases or withdrawal cash.
  • If your business account receivables fall behind, sales are slow or the business is short on cash, a business credit card offers a financial cushion that provides relief until the business’ financials pick back up.
  • Credit cards make online purchases easy.
  • Online tools help small businesses with bookkeeping.
  • Many business credit cards offer rewards and incentives.
  • When used responsibly, business credit cards can help to build credit.

Cons to Business Credit Cards

Just as there are pros to using business credit cards, there are also cons — things that may deter you from using a business credit card.

  • Business credit cards often hold high interest rates.
  • Regardless of if the credit card is for your business, you are personally responsible.
  • Business owners must carefully manage accounts to ensure there are no security issues.
  • Small business credit cards do not carry the same protection as personal credit cards.
  • Most business credit cards do not have fixed interest rates, meaning the interest rate fluctuates.

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